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Institute for Workplace Studies                 Professor Samuel B. Bacharach
School of Industrial & Labor Relations          Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor                  Stuart Basefsky
New York, NY 10016                      Director, IWS News Bureau
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INTERNATIONAL INSTITUTE FOR LABOUR STUDIES (IILS) [at the International Labour Organization (ILO)
Discussion paper DP/154/2004
Decent Work Research Programme
The Irish social partnership and the “celtic tiger” phenomenon
Lucio Baccaro and Marco Simoni
http://www.ilo.org/public/english/bureau/inst/download/dp15404.pdf
[full-text, 47 pages]

[excerpt]
In this paper, we seek to understand in what ways, if any, social partnership contributed to the “Celtic
Tiger” phenomenon as well as the political process through which centralized wage determination was
initiated and sustained over time. Our analysis centers on the notion of competitiveness gains, which we
define as reductions in unit wage costs. We argue that social partnership introduced important changes in
the process of wage formation in this country. Thanks to social partnership, wage increases in the
“dynamic” multinational sector (characterized by high productivity growth) came to be tightly linked with
wage and productivity increases in the much more sluggish domestic portion of the manufacturing sector.
This represented an important departure from the recent past, when wage settlements struck in the high
productivity sector had unduly influenced the process of wage formation in the economy as a whole and
thus led to labor shedding in the low productivity sectors (Baker, 1988; Barry and Hannan, 1995; Barry,
1996). AND MORE....


TABLE OF CONTENTS
Introduction ..... 1
1. The development of the Irish social partnership ....................................................................... 2
2. Does social partnership matter? ................................................................................................ 5
3. Multinationals, social partnership, and the “Irish disease” ....................................................... 7
a) The role of multinationals................................................................................................. 7
b) The moral economy of wages and the “Irish disease”...................................................... 8
c) The effects of social partnership ..................................................................................... 10
4. The politics of wage restraint in Ireland.................................................................................. 12
a) Pro-partnership coalitions...............................................................................................13
b) The problem of compliance............................................................................................ 15
5. Concluding remarks ................................................................................................................ 17
References ..... 20
List of tables and figures
Tables
Table 1. Pay terms of the Irish social partnership agreements (private sector) ....................................26
Table 2. The Irish manufacturing sector by nationality of ownership ………………………………. .27
Table 3. Correlations between wage and productivity increases in Ireland
(29 manufacturing sectors) .....................................................................................................28
Table 4. Distributional consequences of the social partnership’s pay terms
(Manufacturing sector) ……………………………………………………………………….29
Figures
Figure 1. Growth and employment in Ireland
(1983-2000) …………………………………………………………………………………. 30
Figure 2. Productivity and wage trends in “modern” and “traditional” manufacturing industries
(1980-1987) ............................................................................................................................31
Figure 3. Productivity and wage trends in “modern” and “traditional” manufacturing industries…….32
Figure 4. Productivity and wage trends in “foreign” and “domestic” manufacturing industries
(1980-1987) ............................................................................................................................33
Figure 5. Nominal wage and productivity increases by nationality of establishments
(1987-98) .34
Figure 6 Wage trends in Ireland
(1988=1034
Figure 7 Distribution of union membership in the ICTU.......................................................................35


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